Could SA’s Milk Shortage Hit Namibia?

Namibia Dairies says it is monitoring the milk shortage in South Africa although it does not pose an immediate threat to Namibia.

The Milk Producers Organisation (MPO) of South Africa has warned consumers in South Africa to brace themselves for shortages of milk throughout the winter period.

Namibia imports UHT milk and other milk products such as yoghurts and cheese from its neighbour.

A statement issued by MPO’s Managing Director Bertus de Jongh, which was passed on to New Era, explained that the shortage is a result of sharp increases in maize and feed costs, combined with low producer prices.
Prices of maize, an important component in cattle feed, have increased by almost 300 percent since August 2006.

Yesterday though, both the Namibia Dairy Producers’ Association (DPA) and Namibia Dairies said Namibia would not be hit by the shortage in the near future.

He told New Era there were no indications how much milk would still be exported to Namibia because of the shortage.

DPA President, Japie Engelbrecht, also allayed fears that the South African problems would affect Namibia considering that that country exports lots of its milk products to Namibia.

The Namibian market is just one percent of the total South African market, which means that the exports would still continue, said Engelbrecht, adding that there was a possibility that even in the face of problems, the producers would still export to Namibia to avoid losing their market share.

However, he was quick to point out that if the situation worsens, exports of long life milk could be reduced.

De Jongh said in the long term, the milk shortage would have an extremely negative impact on the dairy industry, which might lead to consumers turning to alternative food sources and the industry losing its market share.

The shortage is a direct result of price signals relayed to producers two years ago, when milk prices in South Africa dropped unexpectedly, said De Jongh.

Namibian producers have faced pretty much the same situation since two years ago until last month when retail prices of fresh milk were increased by 50 cents per litre. Prices in the industry had not been increased for the past two years on fresh milk and instead producers had to accept a price reduction of 10 cents per litre on raw milk in the middle of 2005.

Namibia Dairies announced the price increase last month after fears that the collapse of the dairy industry could lead to dependence on imports and increases in retail prices due to lack of local competition.

Meanwhile, van Jaarsveld has said his company is talking to local producers on the matter while an annual meeting has been scheduled to find ways on what else can be done to save the industry.

“We are monitoring the situation very closely,” said the MD.

There are also indications that the extension of the Infant Industry Protection until 2012 will be gazetted soon, enforcing a 40-percent levy on all imported UHT milk.

The industry applied for an extension to SACU through the Ministry of Trade to bring some relief to the dairy industry, which is going through turbulent times due to more competitively priced milk from neighbouring South Africa.

The industry is now awaiting the implementation of the 50-cents per litre price increase, which takes effect on April 1.